Can Apple Convince The Mainstream Consumer to Switch to iTunes Radio?

Jason Herskowitz recently participated in an extended discussion with sidewinder.fm about Apple's highly anticipated iTunes Radio product and whether it can attract the interest of the mainstream consumer.

He is a core-contributor to the multi-source music platform, Tomahawk, and co-founder at Hatchet Industries, a yet to be unveiled stealth project. This is a condensed and edited version of the phone interview.

Initial Thoughts

Sidewinder: Much of the critical reception of iTunes Radio has consisted of balking at its similarities to Pandora. Industry pundits and market analysts are saying that Apple isn’t being innovative enough; it developed a “copy cat” feature, not a game-changing product. What was your initial reaction to iTunes Radio?

Herskowitz: This was my question, as I’m so close and tied into this market, is: how much do the “normal” people in the world know about or have brand affinity for Pandora? And if those people do, is Apple going to have something that is unique enough to get those users to switch from what they are already doing with Pandora. Those are all the things that raced through my mind when I first heard about iTunes Radio. As I got closer and started to realize that this isn’t a stand-alone app. This is actually built within the music app itself. I started to see more of the value proposition. The fact that of the mainstream users, who many are still in their iPod or iPhone music app and hitting shuffle and listening. The fact that there is radio programming within that same app, built on top of that same catalog. Is that moving the entry point far enough upstream that it’d siphon off some of those Pandora users?

Switching Costs

Sidewinder: With that said, do you think Apple’s goal with iTunes Radio is to get Pandora users to switch or lock-in existing users to the music app?

Herskowitz: I think that most average iTunes users have used Pandora at some point or another. So I think Apple has to be thinking a little bit about switching. Because as you know and I know, and everybody else knows, the fact that all of the normal people that we know, that are not in this industry, are all generally aware of Pandora and have used it at least once and some of them very often. So I think Apple does need to think about getting those users to switch. Obviously, those that haven’t switched yet, or don’t know about Pandora yet, then great, they can get in there as well. But iTunes Radio is also going to help drive incremental download sales, which is of course, as Apple tries to extend the life of download sales as long as they can: this affords them the opportunity to do that. And of course, iTunes knows exactly how many iTunes downloads Pandora sells. Those are all numbers that they are very aware of, and they see how much sales Pandora drives, so they can think about: “If we can get upstream of Pandora...” There’s going to be benefits to them in the kind of longer play. Ultimately, I think Apple’s play is much more about the iAds platform than about being a music service for the sake of being a music service.

Mainstream Consumer

Sidewinder: Media analyst Mark Mulligan described Apple’s move as “cautious” because it is “intent on innovating at a pace that matches the appetite of its mainstream customers.” How has the “appetite” of Apple’s mainstream customers shaped its iTunes Radio feature?

Herskowitz: I think the average, mainstream, music consumer is a very lean back consumer. These are not the guys that are the on-demand subscribers, these are the guys that want a big play button. They hit play, lean back, and go about their business. They are looking for an out of the way, programmed experience that requires very little work for them. And I don’t know this for fact, but based on my own historical usage of my iPod — and anecdotally of other people’s use of the iPod — I think probably the most common use-case you see of people that are still listening to music on the iPod or the local music on their phone, is they open up their library, hit shuffle all, they go about their business, and when they want to skip: they hit next until they find something that they are looking to listen to. So I think that the radio experience as Pandora brought to the mainstream market is something that Apple is very aware that is right in line with the consumption behaviors of the mainstream music fan.

Sidewinder: I agree with you there. It always seems like question to ask is only ever, have casual listeners ever wanted more than Internet radio and does tuning into a custom station need to be a social experience? If not, then Apple should strive to find the signal and tune out a decade of startup noise.

Herskowitz: I think Apple has to a large extent. Whereas there are endless numbers of companies or products that are looking to solve the discovery problem and/or ways to get more of the listener’s attention, I think the mainstream consumer really wants to pay less attention to their music experience, not more. So an experience like Pandora or Songza, who has also done very well is this scenario, because they have taken all of the decision making out of the process for you. You don’t even have to say what you want to listen to, you just have to tell Songza what you’re doing. So you alleviate all of the paralysis around, what do I want to listen to? You say it’s Tuesday afternoon, it’s hot, and I’m working. Okay, now I have the choice of three playlists as opposed to some infinite choice of what artist station, or what song station, or whatever. So I think that there are a lot of people kind of pursuing the stream of, “We want to figure ways to get people to pay more attention to music.” When most people are saying, “I want to figure a way to pay less attention to music because it’s really, most often a background activity while I go about doing something else.”

Lean Back

Sidewinder: On this topic of creating experiences that require consumers to pay less attention to music, that definitely seems like the route that Songza, 8tracks, and the upcoming Daisy music service are going. It’s lean back to even a fuller degree than it was in the past. It’s not just lean back radio, it’s an entire lean back experience of consuming songs that fit into a larger theme.

Herskowitz: I agree. I think that, as more and more things demand our attention, those experiences that require less and less of it are the ones that people are gravitating to, because otherwise you are competing with everything else. I had an interesting conversation the other day about the pricing around subscription music services; it turned to the fact that Hulu and Netflix, which are entertainment services that are a primary focal point while you consume them cost less than music, which is always a secondary focal point while you consume them. Even though you may be consuming them for less amount of time, the notion that how focal is it of your experience or your life at that given point, how much of that should be a determining factor in the price.

Sidewinder: When we say that people pay less attention to music in these services, does the likelihood of these people purchasing music or subscribing to the service go down?

Herskowitz: That’s a good question. I don’t know. For me, and obviously this is a sample set of one, but as I sit around and listen to music all day when I’m working, or I’m driving, or I’m running, or I’m doing whatever, there are songs that actually shake me out of whatever I was doing, grab my attention, and change my focal point to, “Whoa, what is this?” That’s really powerful. And that, I think, is still very powerful then to say, “Okay, well, now, I need to know what this thing is, because it just totally grabbed me by the shoulders and shook me.” And so there, I could make the argument that I’m actually more prone to go and buy the song, or add it to a playlist, or make sure that I listen to that again. Because it had the capability to kind of really stir something up.